Corruption and the Future of the Church

Stephen C

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Note: It looks like we’ve missed our monthly “cutting-edge research” installment, but I haven’t forgotten…there was just no peer-reviewed articles dealing primarily with the Church this month! Hopefully to be continued next month.

One of the more interesting studies in political science was the famous diplomat parking paper. In New York City and Washington DC one often sees vehicles with blue-plated tags that signal that its owner has diplomatic immunity. Among other things this means that they can basically park where they want and they don’t ever have to pay traffic tickets. Researchers measured how many traffic tickets each country’s diplomatic corps received and plotted it against various empirical measures of corruption, finding that they strongly correlated; if you live in a country that has been empirically scored as being corrupt you tend to incur a lot of traffic tickets that you have no intention of paying, whereas diplomats from less corrupt countries tend to obey parking rules even though they don’t have to. 

This provides evidence that some countries are more corruption-tolerant than others. Yes we have our issues too, but it’s a bit gaslighty to pretend that bribing the cop in Russia or Mali will be met with the same response as bribing the cop in, say, Sweden. (When my parents were on a mission in Russia they explained that in Russian culture you’re sort of a jerk if you don’t offer the police officer a bribe. The man has a family to feed after all, or as a member stated “they pay them enough for their bread, that is what they need to do for their butter.”) 

The fact is that different countries have different tolerances for different kinds of corruption, and there is a boatload of empirical evidence for this, not just the parking study. Perhaps the most well-known, established indicator of these differences is Transparency International’s Corruption Perceptions Index. 

So what does this have to do with the Church? 

The Church runs an extremely tight ship financially. No objective, honest appraisal of Church finances would conclude that it has a corruption or embezzlement problem; you have to really want to see it to see anything there. When the slush fund came to light I remember mentioning it to a person of another faith that has had its own share of bona fide financial scandals, and they were sincerely confused. It went something like this. 

“I thought I saw something about that. A leader stole money?”   

“No,” 

“So what’s the problem again?” 

“They’re saving a lot of money, and it’s a lot more money than people thought.” 

“?”

I don’t mean to be dismissive of people who are struggling with the Church’s finances, but let’s at least admit that it’s not in the same category as a traditional “financial scandal.”

So far the Church’s center of gravity has been in the United States, a sort of middle-tier country for corruptness. However, as I have mentioned many times, over the next century the demographic ballast of the Church (and other religions, and just about everything else because they are the only ones still producing families) will shift over to the developing world. So, all things being equal, if a judge, police officer, store clerk, or politician is more likely to take money from the till in Uganda, there is no reason to think that it would be any different for Church members or leaders in those same countries, and as the Church center of gravity moves from a place with middling corruption to places with higher corruption I suspect financial malfeasance is going to become more of an issue to get used to in the Church when it is simply not one right now. 

To be clear, I’m not making some essentialist statement about Africa or Africans and I’m going to push back hard on any accusations that I’m doing some sort of racial dog whistling. I’m making a statement about low corruption/high corruption countries. If the Church was growing fast in Russia we’d have issues with Church members and leaders in a high corruption context that happens to be white. It’s just that Africa is the intersection of a place where 1) the Church is growing, and 2) objectively speaking a lot of countries in that specific area of the world have significant corruption. Also, there is variation within Africa; presumably the Church is going to have more of these issues in a high corruption African country like the DRC and less in a low corruption African country like Botswana. Finally, plenty of white Mormons have stolen money (e.g. Joseph F. Smith accusing John Willard Young of embezzling Church funds during his time in New York City, and of course the issues during the Utah United Order attempts). 

Also, I’m not passing any kind of a cultural or institutional judgment. If the Swedes aren’t replacing themselves it doesn’t really matter how scrupulous their bank tellers are. They have their own issues, and this one variable shouldn’t be taken as some holistic grade for a society or people at large.

Comments

12 responses to “Corruption and the Future of the Church”

  1. Kent Gibb

    I have served as a mission accountant, (1965), Ward financial clerk a number of times and Stake financial clerk. I have to attest that the financial controls and audits are extremely tight. It would take a very skilled, determined and clever to manage to take any money from the church in those positions, especially today. On the Ward and Stake levels, the church runs a very tight ship and I feel we can be assured the finances are well monitored and free of corruption.

  2. Last Lemming

    Allow me to fix your explanation of the financial scandal.

    “So what’s the problem again?”

    “They’re saving a lot of money, and they tried to hide it from the membership by setting up a series of mafia-like shell corporations in violation of SEC rules. Then they got caught, exposed, and fined.”

    Sure, for some people, it’s about the amount. But for many of us, it is about the lying and cheating and the pretending that such behavior is not a big deal. I continued to pay tithing to the Church until the SEC report came out. Those days are now over.

  3. Stephen C

    Kent Gibb: I agree the rules are fairly solid (one difficulty the Church has in some of these countries is that they don’t pay the bribes that are necessary to get anything built), but I still think that if you had a couple people cooperating at particular choke points you could pull it off. Fast offerings, for example, seem like a route where you could have some plausible deniability for embezzlement.

    Last Lemming: I don’t want to turn this into a back and forth about the SEC business, but I kind of was asking for it by including my little aside, so sure: shell corporations are not mafia-like. A lot of people use them; I know very upstanding people who have been paid through shell corporations. I’m more sympathetic to the idea that the Church could have been more transparent (if for no other reason than it is clear that it would have come out eventually anyway), but “mafia-like” is being dramatic. Any large, complex corporation or institution occasionally runs into fines.

  4. A Turtle Named Mack

    Aside from whether people in countries with higher levels of corruption would be more willing to misappropriate Church funds, I wonder about how the Church (institutionally) will go about conducting business in these countries. If, as you suggest, the center of gravity shifts towards such countries, will the Church need to engage in dealings that are less-than above board to get things done? Will they provide bribes for building permits, or look the other way as contractors take their cut, or grease the wheels to gain access for missionary work? Will the expectations of leaders in these countries prevent the Church from expanding in those areas? I do think there are tight controls in place to mitigate fraud and corruption at the individual level. But systemic corruption is a different animal. I think about the (un)successful attempts to clean up Olympic and World Cup selection committees. Of course, aside from the moral issues, I don’t think the Church can afford to get into the bribing business. If they do it one time (assuming they haven’t, already), word will get out and it will be open season on an organization that now everyone knows has A LOT of money to spread around.

  5. Tom

    I’m less concerned that the Church broke the law and paid a small fine than that the Church has a hundred billion dollars stashed away while we have scores of homeless people in Salt Lake City. They say they’re saving it for a rainy day? For many people, it rains every day.

  6. REC911

    Maybe now that members pretty much have heard about the rather large “rainy day” fund, perhaps the church will spill the beans as to what this is for. It’s one thing to have tons of money sitting around but no plans for it is altogether another issue. 100+ temples in the pipe-line is taking a decent chunk but I hope they are not just spending $ on temples to make it look like we are not hoarding the $.

    I dont have a problem with the SEC deal as those reports we hid are to protect the investors in these managed funds. Church is the only investor in those funds. Spirit/letter thing here for me.

  7. ji

    I don’t know any details, but I did hear mention of a fast offering scandal in Tbilisi when I was there a while back.

    One of the ways the church avoids paying bribes or baksheesh in parts of the world where “facilitation payments” are standard procedure is by using local contractors or other intermediaries — the contractors get the job done, and the “facilitation payments” are not visible to church officials.

  8. RL

    Watch the Education sector and the March released Charitable Report releasing this month for what is getting focused on for spending. The endowment still isn’t large enough to sustain the Church in perpetuity but will likely get there in the next 20 years. Growth is starting to pick up overseas in developing nations. The Church growth rate will tick up closer to 2% for the year.

    On “corruption” there may be cases where money will be needed to keep Visas going or get things done. I get in general it shouldn’t be done but there might be cases it may be justified.

    I listened to an interesting podcast on how much more corrupt Israel has gotten with the influx of Russians. There are places like Russia or China or Israel where the Church is making accommodations it wouldn’t in other locations.

  9. D

    It definitely isn’t that they saved more than people thought, and for a lot of people, it isn’t even that they hid it from the SEC and the membership. It’s more like what Tom says. They have enough to literally end hunger and they just keep the money stashed away. They have people who don’t have enough to survive on giving 10% of their income when they have enough to cover all their expenses indefinitely (based on how much interest all their investments generate). The money they do spend on charity is a drop in the bucket compared to how much they have in their investments (and the numbers they report as charitable giving often include regular member’s and volunteer missionaries’ time. i.e. things that individuals give and cost the institution itself nothing) . I think that sums up most people’s issue with it.

  10. Jack

    Just to bring a little perspective to the debate: the average net worth of an American adult is a little over a million dollars. And so, going by that metric alone there shouldn’t be any hunger–not in the U.S. at least.

    That said, if the church were to divvy up its rainy day fund among all of its members it would amount to something like 5 or 6 thousand per individual–not a lot.

    So–yes–100 billion certainly seems like a lot of cash. But when we consider how large the church is in terms of its operations, properties, and welfare services, that amount would keep the church afloat for maybe a few months–that is, if it had to rely on its rainy day fund as its sole source of income.

    That said, I rejoice in the church’s prosperity. It opens the doors to all kinds of wondrous possibilities in the future–especially with regard to the church’s growth among the poor.

  11. Amira

    I have lived in two different countries in Africa for a total of five years so far, and I see hungry children at church every week. I see kids at church whose parents can’t afford to pay their school fees, so they’re not in school. I was a Relief Society president for some of that time, so I was painfully aware of the needs of those children that were not being met.

    I am far more concerned about church leaders (whether they are local or foreign—I’ve seen it both ways) underspending on essential assistance like food and schooling for families than about church leaders potentially embezzling funds. But you do you, and continue to blog about your perceived risks to the institutional church in this part of the world. For me, the future of the church is the children in our wards and branches, and food and education are essential for them.

    Also, diplomats don’t get diplomatic immunity for everything they do. Diplomats are certainly required to pay traffic tickets. It would have been more accurate for you to say that the study relied on the fact that diplomats used to be able park where they wanted and didn’t have to pay tickets, but that rule changed way back in 2002. It’s not helpful to assume that diplomats anywhere have a get-out-of-jail-free card, just like it’s not helpful to encourage the perception that church leaders who are from (no matter where they live) countries with higher levels of corruption are somehow more likely to not follow church guidelines surrounding money than people who are from countries with lower levels of corruption.

  12. Juan Reta

    But corruption does not only come from the possible misappropriation of financial resources or theft. It also occurs in construction and service contracts. I believe that no serious investigation has been done into the relationship between the contracted companies and budget allocations. In countries like Mexico, companies related to corporate leaders and their families are often favored. Nepotism is also another factor to consider.

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